Teleflex(TFX) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q4 2024, Teleflex reported revenues of $795.4 million, an increase of 2.8% year-over-year on a GAAP basis and 3.2% on an adjusted constant currency basis [11] - Adjusted earnings per share grew 15.1% to$ 3.89 [13] - For the full year 2024, adjusted constant currency revenues increased 3.1% year-over-year, with adjusted earnings per share at $14.01 [18] Business Line Data and Key Metrics Changes - Interventional business saw adjusted constant currency growth of 18.7% in Q4 2024, while Surgical business grew by 12.3% [11] - Interventional Urology revenue increased by 3.7% on an adjusted constant currency basis, with growth in Palette offset by softness in the UroLift business [19] Market Data and Key Metrics Changes - Adjusted gross margin for Q4 2024 was 60.1%, flat compared to the prior year, while adjusted operating margin was 27.6%, up 130 basis points year-over-year [17] - Cash flow from operations increased 24.7% year-over-year to$ 638.3 million in 2024 [20] Company Strategy and Development Direction - Teleflex announced the acquisition of BIOTRONIK's Vascular Intervention business for approximately EUR760 million, aimed at expanding its presence in the cath lab and driving sustainable revenue growth [32][34] - The company plans to separate into two independent publicly traded companies, RemainCo and NewCo, to optimize its product portfolio and enhance shareholder value [48][49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 6% plus revenue growth for RemainCo post-separation, despite challenges in the UroLift business and OEM segment [106] - The guidance for 2025 anticipates adjusted constant currency growth of 1% to 2%, reflecting a challenging trading environment [104] Other Important Information - A noncash goodwill impairment charge of $240 million was recognized for the Interventional Urology North America reporting unit due to subdued revenue growth [21] - The company plans to finance the BIOTRONIK acquisition through a new term-loan and revolving borrowings under its existing credit facility [47] Q&A Session Summary Question: What prompted the review and timing for the separation? - Management indicated that continuous portfolio reviews led to the conclusion that separating the businesses would maximize shareholder value, given their different growth strategies and profitability profiles [78][80] Question: How will the sales force be structured post-acquisition? - The acquisition allows for leveraging Teleflex's strong access to cath labs in the U.S. while combining strengths in EMEA, enhancing sales opportunities for both businesses [84] Question: What is the growth outlook for the acquired BIOTRONIK products? - The acquired products are expected to generate approximately EUR91 million in revenues in Q4 2025, with a growth expectation of 6% or better from 2026 onwards [96] Question: What are the expected margins for RemainCo and NewCo post-separation? - RemainCo is expected to grow at over 6% with mid-60s gross margins, while NewCo is anticipated to grow in the low single digits with mid-50s gross margins [118][120]